TEAMS Act

I 116TH CONGRESS 2D SESSION H. R. 8501 To establish minimum competency standards for tax return preparers, and for other purposes. IN THE HOUSE OF REPRESENTATIVES OCTOBER 1, 2020 Mr. VELA introduced the following bill; which was referred to the Committee on Ways and Means A BILL To establish minimum competency standards for tax return preparers, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Tax-preparer Enforce- 4 ment, Accountability, and Minimum Standards Act’’ or 5 the ‘‘TEAMS Act’’. 6 SEC. 2. REGULATION OF TAX RETURN PREPARERS. 7 (a) IN GENERAL.—Subsection (a) of section 330 of 8 title 31, United States Code, is amended— 9 VerDate Sep 11 2014 00:45 Oct 29, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8501.IH H8501 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 8501 IH (1) by striking paragraph (1) and inserting the 1 following: 2 ‘‘(1) regulate— 3 ‘‘(A) the practice of representatives of per- 4 sons before the Department of the Treasury; 5 and 6 ‘‘(B) the practice of tax return preparers; 7 and’’; and 8 (2) in paragraph (2)— 9 (A) by inserting ‘‘or a tax return preparer 10 to prepare tax returns’’ after ‘‘practice’’; 11 (B) by inserting ‘‘or tax return preparer’’ 12 before ‘‘demonstrate’’; 13 (C) in subparagraph (C), by inserting ‘‘and 14 minimum competency standards’’ after ‘‘nec- 15 essary qualifications’’; and 16 (D) in subparagraph (D), by striking the 17 period at the end and inserting ‘‘or in preparing 18 their tax returns, claims for refund, or docu- 19 ments in connection with tax returns or claims 20 for refund.’’ 21 (b) AUTHORITY TO SANCTION REGULATED TAX RE- 22 TURN PREPARERS.—Subsection (c) of section 330 of title 23 31, United States Code, is amended— 24 (1) by striking ‘‘before the Department’’; 25 VerDate Sep 11 2014 00:45 Oct 29, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8501.IH H8501 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 8501 IH (2) by inserting ‘‘or tax return preparer’’ after 1 ‘‘representative’’ each place it appears; and 2 (3) in paragraph (4), by striking ‘‘misleads or 3 threatens’’ and all that follows and inserting ‘‘mis- 4 leads or threatens— 5 ‘‘(A) any person being represented or any 6 prospective person being represented; or 7 ‘‘(B) any person or prospective person 8 whose tax return, claim for refund, or document 9 in connection with a tax return or claim for re- 10 fund, is being or may be prepared.’’. 11 (c) MINIMUM COMPETENCY STANDARDS FOR TAX 12 RETURN PREPARERS.—Section 330 of title 31, United 13 States Code, is amended by adding at the end the fol- 14 lowing new subsection: 15 ‘‘(f) MINIMUM COMPETENCY STANDARDS FOR TAX 16 RETURN PREPARERS.— 17 ‘‘(1) IN GENERAL.—Any tax return preparer 18 shall demonstrate minimum competency standards 19 under this subsection by— 20 ‘‘(A) obtaining an identifying number for 21 securing proper identification of such preparer 22 as described in section 6109(a)(4) of the Inter- 23 nal Revenue Code of 1986; 24 VerDate Sep 11 2014 00:45 Oct 29, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8501.IH H8501 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 8501 IH ‘‘(B) satisfying any examination and con- 1 tinuing education requirements as prescribed by 2 the Secretary, including— 3 ‘‘(i) holding a high school diploma or 4 passing an equivalency exam; 5 ‘‘(ii) completing 30 hours of tax prep- 6 aration training (or work deemed equiva- 7 lent); 8 ‘‘(iii) passing a tax preparation exam 9 with a score of 70 percent or greater every 10 5 years; and 11 ‘‘(iv) completing 15 hours of con- 12 tinuing education every 2 years; and 13 ‘‘(C) completing a background check ad- 14 ministered by the Secretary which does not re- 15 turn any felony convictions. 16 ‘‘(2) EXEMPTION.—The Secretary shall exempt 17 tax return preparers who have been subject to com- 18 parable examination, continuing education require- 19 ments, and background checks administered by the 20 Secretary or any comparable State licensing pro- 21 gram. Such exemption shall extend directly to indi- 22 viduals who are supervised by such preparers and 23 are not required to secure an identification number 24 VerDate Sep 11 2014 00:45 Oct 29, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8501.IH H8501 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 8501 IH under section 6109(a)(4) of the Internal Revenue 1 Code of 1986.’’. 2 (d) TAX RETURN PREPARER DEFINED.—Section 3 330 of title 31, United States Code, as amended by sub- 4 section (c), is amended by adding at the end the following 5 new subsection: 6 ‘‘(g) TAX RETURN PREPARER.—For purposes of this 7 section— 8 ‘‘(1) IN GENERAL.—The term ‘tax return pre- 9 parer’ has the meaning given such term under sec- 10 tion 7701(a)(36) of the Internal Revenue Code of 11 1986. 12 ‘‘(2) TAX RETURN.—The term ‘tax return’ has 13 the meaning given to the term ‘return’ under section 14 6696(e)(1) of the Internal Revenue Code of 1986. 15 ‘‘(3) CLAIM FOR REFUND.—The term ‘claim for 16 refund’ has the meaning given such term under sec- 17 tion 6696(e)(2) of such Code.’’. 18 (e) AMENDMENTS WITH RESPECT TO IDENTIFYING 19 NUMBER.— 20 (1) IN GENERAL.—Paragraph (4) of section 21 6109(a) of the Internal Revenue Code of 1986 is 22 amended to read as follows: 23 ‘‘(4) FURNISHING IDENTIFYING NUMBER OF 24 TAX RETURN PREPARER.— 25 VerDate Sep 11 2014 00:45 Oct 29, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8501.IH H8501 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 8501 IH ‘‘(A) IN GENERAL.—Any return or claim 1 for refund prepared by a tax return preparer 2 shall bear such identifying number for securing 3 proper identification of such preparer, his em- 4 ployer, or both, as may be prescribed. For pur- 5 poses of this paragraph, the terms ‘return’ and 6 ‘claim for refund’ have the respective meanings 7 given to such terms in section 6696(e). 8 ‘‘(B) EXCEPTION.—Subparagraph (A) 9 shall not apply to any tax return preparer who 10 prepares a return or claim for refund under the 11 supervision and direction of a tax return pre- 12 parer who signs the return or claim for refund 13 and is a certified public accountant, an attorney 14 or enrolled agent.’’. 15 (2) CLARIFICATION OF RESCISSION AUTHOR- 16 ITY.—Section 6109 of such Code is amended by in- 17 serting after subsection (d) the following new sub- 18 section: 19 ‘‘(e) AUTHORITY TO RESCIND IDENTIFYING NUM- 20 BER OF TAX RETURN PREPARER.— 21 ‘‘(1) IN GENERAL.—The Secretary may rescind 22 an identifying number issued under subsection 23 (a)(4) if— 24 VerDate Sep 11 2014 00:45 Oct 29, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8501.IH H8501 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 8501 IH ‘‘(A) after notice and opportunity for a 1 hearing, the preparer is shown to be incom- 2 petent or disreputable (as such terms are used 3 in subsection (c) of section 330 of title 31, 4 United States Code), and 5 ‘‘(B) rescinding the identifying number 6 would promote compliance with the require- 7 ments of this title and effective tax administra- 8 tion. 9 ‘‘(2) RECORDS.—If an identifying number is re- 10 scinded under paragraph (1), the Secretary shall 11 place in the file in the Office of the Director of Pro- 12 fessional Responsibility the opinion of the Secretary 13 with respect to the determination, including— 14 ‘‘(A) a statement of the facts and cir- 15 cumstances relating to the determination, and 16 ‘‘(B) the reasons for the rescission.’’. 17 Æ VerDate Sep 11 2014 00:45 Oct 29, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H8501.IH H8501 pbinns on DSKJLVW7X2PROD with BILLS